Breaking News

LVMH files countersuit against Tiffany in US court

September 30, 2020
fashion

French luxury goods maker insists conditions were not met to complete its $16bn acquisition deal

The world’s biggest luxury group LVMH filed a countersuit against New York-based Tiffany & Co in a Delaware court on Monday, claiming conditions to close its $16bn buyout of the luxury jewellery retailer were not met.

The countersuit follows legal action launched by Tiffany earlier this month after LVMH backed out of its takeover.

“LVMH continues to have full confidence in its position that the conditions necessary to close the acquisition of Tiffany have not been met and that the spurious arguments put forward by Tiffany are completely unfounded,” the owner of Louis Vuitton said in a regulatory filing on Tuesday.

LVMH said that a 'Material Adverse Effect' has occurred, citing the 'devastating and lasting' impact the Covid-19 pandemic would have on Tiffany's business. It also said the jewellery retailer mismanaged the business through the pandemic, for example, by paying 'the highest possible dividends while the company was burning cash and reporting losses'.

It also said the jeweller took on additional debt while slashing capital and marketing investments.

The Louis Vuitton owner said its board had assessed the financials of Tiffany and its management during the Covd-19 crisis. It said the jeweller’s first half results and performance for 2020 “are very disappointing and significantly inferior to those of comparable brands of the LVMH Group during this period”.

In its regulatory filing, LVMH, run by Bernard Arnault, the world’s fourth richest man, insists it has fully met its obligations under the merger agreement, including obtaining all regulatory clearances.

Tiffany filed its lawsuit against LVMH earlier this month after LVMH backed out of the deal, citing a letter from the French foreign minister instructing it to delay the deal until January next year 'in reaction to the threat of taxes on French products by the US'.

The jeweller described LVMH's counterclaim as 'baseless and misleading' in a statement on Tuesday, stating that LVMH had offered no support for its claim that it had failed to operate in the ordinary course of business.

“LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany,' Roger Farah, chairman of Tiffany's board, said in a statement.

'Tiffany has acted in full compliance with the merger agreement, and we are confident the court will agree at trial. Had LVMH actually believed the allegations made in its complaint, there would have been no need for LVMH to procure the letter from the French foreign minister as an excuse for its refusal to close.”

The onset of Covid-19 crimped economic growth and dented the sales of the global luxury goods market. However, Tiffany said that it had only experienced a single quarter of losses before returning to profitability and is projecting higher fourth quarter earnings in 2020 than in the same period last year.

“I am so proud of how Tiffany has gone above and beyond during the pandemic to deliver our brand mission and keep delighting our customers, even in the most uncertain of times,' chief executive Alessandro Bogliolo said.

Tiffany filed a motion to expedite the hearing, which the court in Delaware granted earlier this month. A trial date has been scheduled for January 5 next year.

LVMH's acquisition would have been the biggest ever in the luxury industry and was meant to expand LVMH’s relatively modest presence in jewellery. Terms were agreed before the onset of the coronavirus.

thenational

Top News



fashion

Digital supermodel: meet the Gulf's firs...
October 20, 2020
Arab Fashion Week: What to expect from t...
October 20, 2020
Smiley face charms and pastel colours: ...
October 19, 2020